Originally Posted by
BlueMoon
It's taxed at whatever tax bracket you'd be in for that check. Since it would be a big check you'd probably be in the 28% tax bracket.
You would get a lot of it back when you filed your tax return.
Originally Posted by
typical41
Exactly, this is correct information.
To clarify, the bonus is taxed as ordinary income. However, a higher percentage of taxes may be
withheld on the bonus check because the higher check amount indicates a higher percentage based on the IRS withholding tables. Any over/underpayment of taxes will be trued up when you file your return. Whether or not you receive a refund depends on a lot of things. (i.e. withholding status, other income, exemptions, deductions, etc.)
Personally, if I knew I was going to receive a bonus that would be withheld at an artificially high rate, I would change my withholding status (at least temporarily) to divert more of that money to my checking account in lieu of the US Treasury.
(*Personal opinion, NOT tax advice.*)
In any case, a good improvement for Compass pilots.